PLEASE NOTE THAT THIS IS A CLENT SCENARIO ONLY. CLIENT SCENARIOS ON THIS WEBSITE ARE HYPOTHETICAL EXAMPLES OF THE KINDS OF SERVICES AND SOLUTIONS WE CAN OFFER TO ASSIST YOU WITH YOUR FINANCIAL PLANNING NEEDS. THE SCENARIOS SHOULDN’T BE TAKEN AS A GUARANTEE OF FUTURE INVESTMENTS AND THEIR RESULTS.
For most of her adult life, Linda has worked in Human Resources for large corporations. She is 56- years-old and recently became a grandmother. She would like to retire sooner than planned to spend more time with her granddaughter and pursue her own interests. In four years’ time, Linda will start to receive a company scheme pension of £19,000 p.a. She will also be entitled to a tax-free lump sum. She will not receive the state pension until she turns 67.
Client aims and objectives
- Retire now, with no future return to employment.
- Generate £19,000 gross p.a in the four years until she turns 60.
- Have us review the other existing funds (or ‘money purchase funds’) she has – two Group
- Personal Pensions (GPPs) from her current and previous employment cumulatively worth £105,000.
- Phased-income withdrawal. We could identify that Linda does not need her tax-free lump-sum in one go. Therefore, we would explain the concept of phased-income withdrawal.
- Review of money-purchase plans. We would explain the money purchase income options available to Linda. As she can withdraw funds from her GPPs in varying amounts after the age of 60, we would set out the concept of ad-hoc withdrawals. We would focus in particular on ‘Flexi- access drawdown’.
- Minimise Income Tax liability. One-quarter of Linda’s £19,000 yearly pension could be generated via tax-free cash. And, her personal tax allowance could be set against this pension income withdrawal – this would minimise her income tax liability.
Linda was able to retire early, achieving her main objective. She did this by using the money purchase funds she had built up. She was also able to leave her valuable company scheme pension plan in place for her previously set retirement age of 60, thus avoiding early retirement reductions. Linda also benefits from our on-going advice on her drawdown plan. We agreed an annual review in which we can reassess her aims, objectives, income requirements and attitude to investment risk.